If you’re like many people nearing retirement, you may be considering a long-distance move to a new location. Perhaps you’re in search of a lower cost of living, or maybe you want to soak up the sun and avoid winter. Whatever your motives, it can really pay to do your research. Some states are actually more economically friendly to retirees than others. Some of them are downright unfriendly -when it comes to taxes on Social Security, anyway.
According to Kiplinger’s 2014 report on state taxes, five states tax Social Security benefits at a rate of up to 85 percent. These states may have limited or no tax exemptions on other forms of retirement income, meaning most of your income is subject to state taxes. And while investors usually pay low rates of federal taxes on long-term capital gains, many states treat these investments as regular income. So if you’re a retiree whose portfolio centers heavily on long-term capital gains, living in a state with a high income tax rate could cost you a considerable amount of money.
The five worst states for retirees, according to Kiplinger’s report, were:
- Rhode Island
- Vermont
- Connecticut
- Minnesota
- Oregon
On the other hand, the Kiplinger report also identified the most tax-friendly states for retirees. Most of these states exempt Social Security benefits from state taxes, and many also exempt at least some of your other retirement income. The best states for retirees – where taxes are concerned, anyway – are:
- Georgia
- Florida
- Mississippi
- Louisiana
- Delaware
- South Dakota
- Wyoming
- Nevada
- Arizona
- Alaska
Before you start packing, keep in mind that these states may impose a higher sales tax or property tax on its residents. Do your research before choosing a retirement location, and find one that works best for your individual circumstances.
http://finance.yahoo.com/news/least-tax-friendly-states-for-retirees-144634239.html
http://www.kiplinger.com/slideshow/retirement/T006-S001-10-most-tax-friendly-states-for-retirees/index.html?rid=yahoo&rpageid=10272
